Profile: KongZhong Corp (KONG.O)

KongZhong Corporation (KongZhong), incorporated on May 6, 2002, is a provider of digital entertainment services for consumers in the People’s Republic of China. The Company operates three main business units: WVAS, mobile games and Internet games. In addition to developing and operating its self-developed Internet games, such as Loong, Demon Code and Kung Fu Hero, the Company is the operator of the World of Tanks game for the People’s Republic of China Internet games market. The Company offers a range of WVAS, such as mobile games, pictures, karaoke, electronic books, mobile phone personalization features, entertainment news, chat and message boards. As of December 31, 2011, the World of Tanks game had been downloaded over 4.7 million times, with over five million registered users. In March 2012, the Company acquired 100% interest in Noumena Innovations (BVI) Ltd. (Noumena) and certain assets from a related party of Noumena.

The Company conducts all of its business in the People’s Republic of China through its wholly owned subsidiaries, KongZhong Information Technologies (Beijing) Co., Ltd. (KongZhong Beijing), KongZhong China Co., Ltd. (KongZhong China) and Simlife (Beijing) Science Co., Ltd. (Simlife Beijing). It operates wireless value-added services (WVAS), mobile games, wireless Internet sites and Internet games through Beijing AirInbox Information Technologies Co., Ltd. (Beijing AirInbox), Beijing Wireless Interactive Network Technologies Co., Ltd. (Beijing WINT), Beijing Chengxitong Information Technology Co., Ltd. (Beijing Chengxitong), Zhulang, Beijing Xinrui Technology Co., Ltd. BJXR, Shanghai Mailifang Communications Ltd. (Mailifang), Xiamen Xinreli Technology Co., Ltd. (Xinreli) and Shanghai Dacheng Network Technology Co., Ltd. (Dacheng), all of which are based in the People’s Republic of China.

Wireless Value-Added Services Business

The Company provides interactive entertainment, media and other interactive services to mobile phone users in China through various second generation (2G) technology platforms, including short messaging services (SMS), interactive Voice Response services (IVR) and color ring back tones (CRBT), and through various second and a half generation (2.5G) technology and operating platforms, including wireless application protocol (WAP) services and multimedia messaging services (MMS). Its WVAS is delivered through telecommunications operator partners. Its WVAS are also delivered and marketed through various media partners, including handset manufacturers, television stations, radio stations, print media and Internet sites. During the year ended December 31, 2011, the Company’s WVAS revenues accounted for 50.2% of its total revenues. The Company’s WVAS business also includes the operation of a range of mobile Internet sites, such as Kong.net, which is its integrated mobile portal; ct.cn, which is its mobile Chinese literature site, and ko.cn, which is its internally-developed mobile games community site.

Mobile Games Business

The Company is a developer and publisher of mobile games for mobile phone users in the People’s Republic of China. It develops mobile games based primarily on the Java technology, as well as smartphone mobile operation systems, such as Internetwork operating system (iOS) and Android. The mobile games the Company develops include action, role-playing and leisure games. Noumena, which was acquired in March 2012, is a developer of cross-platform smartphone mobile game engines. The Handymo game engine, which Noumena developed, enables JavaScript-based development environment and supports all smartphone mobile game platforms, including iOS and Android, among other platforms.

Internet Games Business

During 2011, revenues generated from in-game items purchased by game players who play the World of Tanks game represented over 69% of its Internet games revenues. In addition to licensed games, the Company also develops Internet games internally based mainly on its technologies, which include its game engine (Dazzler three dimensional (3D)), game development platforms and online game billing system. The Company made publicly available its newest self-developed game, Kung Fu Hero, in March 2012 for open beta testing.

The Company competes with Sina Corporation, Sohu.com Inc., TOM Online Inc., Tencent Technology Limited, A8 Music Group and Phoenix New Media Limited.